The penalty rules for tax return preparers pose significant challenges for tax practitioners and their clients. There often is a great amount of uncertainty about what a “tax shelter” is and when and how to disclose return positions. Practitioners must also wrestle with regard to conducting proper due diligence, understanding the standards of conduct necessary to avoid 6694 penalties and determining when to rely on information provided by clients or third parties.

Criminal investigation and prosecution may also lie ahead. Our panel of experts reviewed the government’s view of compliance and due diligence, what practitioners can do to protect themselves, and how to challenge these penalties when they are proposed.